Cryptocurrencies are still relatively new. All these markets have various volatility. Cryptocurrencies have attracted a reputation as volatile investments due to high investor losses due to scams, hacks, bugs and volatility. Also they can be volatile due to various reasons and as a result investors can lose money. So one should be aware of the risks involved in all these matters. Let's discuss that:
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[source](https://pixabay.com/photos/cryptocurrency-concept-blockchain-3409725/)
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**User Risk:**|
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Since it is online based there is a lot of risk left by the user and due to which users lose their money. For example, if you have already sent a cryptocurrency transaction, you cannot reverse or cancel it later. Moreover, if you guess the wrong address or the wrong password, then there is a risk of losing your digital money.
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**Regulatory Risk:**|
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We know that these online based currencies are still regulated or banned in many countries. Some cryptocurrencies have regulators where their status is still unclear. Even many governments or financial institutions are seeking to regulate them as securities, currencies, or both. Sometimes there is instability in this regulated market of any country.
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**Counterparty Risk:**|
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We generally rely on exchanges and occasionally other custodians to store our cryptocurrency. But these are centralized organizations. Hence they are usually controlled by a third party so they remain vulnerable to theft or loss.
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**Management Risk:**|
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Cryptos are still relatively new. Hence they still lack their coherent regulation. However, there are some safeguards against fraudulent or unethical management practices to protect such cryptocurrencies. Many lose crypto due to failure to deliver a product.
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**Market Manipulation:**|
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Market manipulation is a critical issue in cryptocurrency. We know that dominant individuals, organizations and exchanges operate unethically in such markets. So here the resulting risk remains.
Although cryptocurrencies are still relatively new, many investors have changed their fortunes by investing in them. Because they have increased in price by a lot. Moreover, many investors are getting very profitable by investing in this online based currency. But finally, if you can trade with these risks in mind, it is possible to avoid the risk and make a profit.
